CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ

FROM TURKEY – TEXTILES

TO PERU – ADDITIONAL DUTY …

bodies on the entirety of any RTA. In this controversy, India attacked Turkey because, as of 1 January 1996, the latter applied quantitative restrictions on imports of 19 categories of Indian textile and clothing products, considered by the claimant inconsistent with Articles XI and XIII of the GATT 1994 and Article 2.4 of the WTO Agreement on Textiles and Clothing. 24 Turkey adopted the attacked quantitative restrictions in order to complete the Customs Union with the EU, a process started in 1963 -when Turkey and the Council and Member States of the then European Economic Community signed the Ankara Agreement setting up the EC/Turkey Association Agreement, entered into force on 1 December 1964- 25 and finalized in 1995, with Decision 1/95 taken by the EC/Turkey Association Council -i.e. the common body conferred with the power to adopt the implementing measures necessary to achieve the purposes of the Ankara Agreement. 26 Therefore, the defendant invoked Article XXIV of the GATT 1994 to justify the introduction of trade barriers against Indian textiles. As the CRTA did not complete its evaluation on the compatibility of the EC/Turkey Custom Union as a whole with the WTO system, the issue was raised whether the WTO judging bodies, thus in primis the Panel, were competent to assess the overall consistency of a RTA with the GATT 1994. The Appellate Body held that WTO Members availing themselves of Article XXIV of the GATT 1994 in order to justify domestic measures otherwise incompatible with trade liberalization rules have first to explain and demonstrate how the RTA they are relying on is GATT-consistent. This means that WTO adjudicatory bodies have consequently the full judicial power to ascertain the overall compatibility of RTAs with the Marrakesh treaty-system. In particular, in the case at issue, Turkey invoked Article XXIV of the GATT 1994 claiming that the quantitative restrictions on textiles attacked by India were necessary to set up the EC/ Turkey Customs Union foreseen by the 1963 Ankara Association Agreement and accomplished by Decision 1/95 of the EC/Turkey Association Council. Therefore, the defendant had first to demonstrate, and the Appellate Body had first to establish, whether the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV of the GATT 1994 to set up a customs union were satisfied: … Article XXIV may justify a measure which is inconsistent with certain other GATT provisions. However, in a case involving the formation of a customs union, this “defence” is available only when two conditions are fulfilled. First, the party within an RTA: “[a]s to whether panels also have the jurisdiction to assess the overall WTO compatibility of a customs union, we recall that … the terms of reference of panels must refer explicitly to the ‘measures’ to be examined by panels. We consider that regional trade agreements may contain numerous measures, all of which could potentially be examined by panels, before, during or after the CRTA examination , if the requirements laid down in the DSU are met. However, it is arguable that a customs union (or a free-trade area) as a whole would logically not be a ‘measure’ as such, subject to challenge under the DSU” (Panel Report, Turkey – Textiles , para. 9.53, emphasis added). We qualify as incoherent the Panel’s approach on this aspect because a specific measure adopted to realize the object ad purpose of a WTO-inconsistent RTA cannot possibly be justified within the multilateral trade system: a WTO-incompatible regional agreement may not generate WTO-compatible implementing measures. 24 See Appellate Body Report, Turkey – Textiles, paras. 1-5. 25 Council Decision No 64/732/EEC of 23 December 1963 on the conclusion of the Agreement establishing an Association between the European Economic Community and Turkey, Agreement establishing an Association between the European Economic Community and Turkey, OJ 217, 29. 12. 1964, p. 3685; English official version of the text published in OJ (special Edition) C113/2, 24. 12. 1973. 26 Decision No 1/95 of the EC-Turkey Association Council of 22 December 1995 on implementing the final phase of the Customs Union, in OJ L35/1 of 13. 02. 1996.

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